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POLITICO 44

With no director to issue rules and guidance for banks, the bureau most likely will set policy by conducting investigations, suggested Jaret Seiberg, an analyst for the brokerage firm MF Global.

“The ability of the CFPB to investigate financial firms and then bring enforcement actions for violating existing laws is the most potent weapon the agency has absent a director,” he wrote in a recent report. “It is also one that will garner politically attractive headlines.”

The White House finds itself in a bind with liberals and conservatives over who should lead the agency. It has yet to address objections by Senate Republicans, who vowed in a letter last month to block any nominee unless the structure of the bureau changes. And progressive groups vocally oppose the nomination of anyone other than Elizabeth Warren, the Harvard professor of law who has been setting up the agency as an adviser to the treasury secretary.

Warren has not yet been nominated for the post by the president.

Without a director, there would be restrictions on what cases the bureau could pursue. Investigations would have to be rooted in the powers being transferred from the Federal Trade Commission, the Federal Deposit Insurance Corp. and other federal regulators.

A January report by the treasury inspector general said the bureau cannot exercise its authority to prohibit “unfair, abusive or deceptive” practices until a director is in place.

Some within the bureau, speaking on condition of anonymity so as to not jeopardize their positions, indicated that the new standard on abuse is critical, suggesting that banks could benefit from a delay in its enforcement.

The new Dodd-Frank financial regulatory law empowers the bureau to declare a bank practice abusive if it takes advantage of a consumer’s inability to understand the risks, costs or conditions of loans, mortgages and credit cards.

Those outside the bureau expect the enforcement division led by former Ohio Attorney General Richard Cordray — a possible Democratic candidate for governor in 2014 — would fill the director’s void.

“I’m afraid that the temptation will be to proceed by way of enforcement actions, to go after what are perceived violations,” said Jeremiah Buckley, a lawyer who has served as the Republican staff director on the Senate Banking Committee. “It’s very hard to fight an enforcement action. Usually, financial firms with their reputations on the line will settle.”

Readers' Comments (116)

A May 5 letter signed by 44 GOP senators outlined three requirements: a board of directors to lead the agency instead of a single director, congressional appropriations to fund the agency rather than the Federal Reserve and new safety-and-soundness checks so that agency regulations don’t impose costs that could lead to bank failures.

If this situation doesn't make it clear that Republicans are on the side of Wall Street and Big Business, I don't know what will.

It is wrong. The previous poster jabbering about "no one person should have that much power..." is a fool. The Republicans don't like Warren, but they have made it clear that even though the CFPB is the law of the land that they WILL NOT STAFF the director position until the law is changed. In fact they are also trying to blackmail the President by refusing to uphold their constitutional duties and confirm ANY economic appointments until their demands are met. They are holding the country and the economy hostage. Same with the debt ceiling. This is blatant disregard for the rule of law, continuity of government, stability, certainty, however you want to describe it.

When a law passes in this country it needs to MEAN something. Republicans are just plain irresponsible, unprepared, unwilling to govern. The American people need to understand this.

Anything the pubes can do to help the financial sector at the expense of the consumer will ALWAYS be their position. The American people are simply the closest "marks" for industry to exploit, while they still have resources available, they had better wake up. Because more and more every year, corporations rely on overseas markets for their profits. But they still, for now, park those profits off shore until the pubes gain the power to allow those corporations to repatriot those profits paying little taxes on them, leaving the government with even less funds to address the budget deficit in an equitable manner. This is just more "starve the beast" nonsense from the pubes.

The Consumer Financial Protection Bureau is a major Republican nightmare. The bureau will help insure financial systems and services are clear and fair to American consumers. Republicans work for their rich corporate masters, not US, and therefore any agency that helps make sure American consumers get a fair shake and are not run roughshod over by financial giants becomes Republican Enemy Number One. Republicans are furious the agency won't be dependent on monies Congress can cut off, which is why Republicans are pushing (futilely) for that structural change. Investigations will win headlines and because the agency investigators will likely be investigating practices most Americans deem patently unfair, the agency should win great public support. If that happens Republicans will be hamstrung in their attempts to destroy the agency or weaken it to the point of impotency and irrelevancy. Republicans don't mind bringing the full force of their united power in D.C. to destroy good institutions as long as not that many voters become aware of what they are doing. National headlines make more Americans aware and Republicans tend to back off some and talk a different talk. For example, note the last Republican quote in the article: it is laughable to read a Republican intent on gutting the agency deny gutting the agency is what Republicans want to do. Already the press the agency has received is making the Republicans pull in their horns a little in public, though still going full bore behind closed doors to kill the agency that promises to give American consumers a fairer deal when dealing with financial giants so used to ripping consumers off and getting away with it (along with obscene and criminal profits).

Forget the regulations, forget the Bureau, just get the Fed and have them rule that make the Banks that are too big to fail smaller with a smaller capitalized asset value--Period. That would make more smaller banks and not one of them which fails will topple the others and the economy as the last fiasco. Also Wall Street "Change from Banks and Wallstreet Traders" make it more difficult to switch back and forth. Last if a Wall Street firm goes down let it go--why should I have to pay for fraud and unethical business plans? Time to be like T. Roosevelt and talk softly and carry a big stick. Break up the "Business Cartels"

Forget the regulations, forget the Bureau, just get the Fed and have them rule that make the Banks that are too big to fail smaller with a smaller capitalized asset value--Period. That would make more smaller banks and not one of them which fails will topple the others and the economy as the last fiasco. Also Wall Street "Change from Banks and Wallstreet Traders" make it more difficult to switch back and forth. Last if a Wall Street firm goes down let it go--why should I have to pay for fraud and unethical business plans? Time to be like T. Roosevelt and talk softly and carry a big stick. Break up the "Business Cartels"

With or without a leader, the Consumer Protection Bureau must immediately start to regulate the banks to make sure that they pay their fair share in making sure that no American goes hungry or does not have a place to live. If we can't pass laws, then government regulation is the best way to bring about social justice for this country's poor and minorities. Obama knows this, which is why he is starting to put the squeeze on greedy bankers now.

This administration arrogantly ignores the Constitution and congress as it sees fit. If congress will not confirm cabinet mebers or create new agencies then these things are done by executive order. Congress is not consulted on trials for terrorists in the US. Congress purposely refuses to pass Cap and Trade taxes and this administration utilizes the head of the EPA to enact these very same taxes and restrictions on domestic energy. We even have a president ignoring the War Powers Act to personally declare a third active war.

We now have a situation where Elizabeth Warren is rejected by the congress because of her radical anti-business theology and Obama simply allows her to run the deartment while not being authorized by congress. This administration proudly displays its arrogance and corruption. Whatever political flag you pledge alliegance to, one has to realize that these actions are unlawful according to our constitution.

Liberals may support them because "their guy" is in power and they agree with the theology. They should realize that these tactics, if allowed to continue, could be just as well used to enact policies they oppose. Accepting this corruption of the law for short term political gain is dangerous and foolhardy.

Presenting Elizabeth Warren as a head of a new broad over-reaching "consumer" agency shows the radical underpinnings of this administration. Placing her in charge of this agency after being rejected by congress shows an absolute disdain for the laws which give congress oversight of any federal agaency never mind a new agency with such far reaching powers.

This is an arrogant abuse of executive power. This administration exhibits a willingness to bend and break the law at any turn to achieve its desired power and control. If the law stands in their way, they openly ignore the law. They are spitting in the eyes of congress and the American people.

I think that the whole agency needs to be scrapped. The Dodd-Frank programs of the past has brought us to where we are right now. Obama and the Democrats shoved this program though Congress just like they did that Obama-care junk. Yet with the reputation of the two fools Congress actually believed these two? Part two of the wrecking of this country is on the way. Dodd and Frank both need to be in jail.